Intermediate term view - I expect correction for 6-8 weeks and 18 month cycle low in the second half of April.
No new information, the price moved lower as expected, the pattern is is still not 100% clear to say we have reversal. Market breadth turned lower and it is in correction mode already. Higher high is still possible, but with this market breadth it should not last long before the price follows. The McClellan Oscillator moved below 80, which usually means the correction has begun. On the other side it means expect a bounce from an oversold level. I expect a few days higher before FOMC, then we will see what happens on Wednesday.
TECHNICAL PICTURE and ELLIOTT WAVES
Short term - we saw a move lower touching support and the trend line... now waiting for the next high either lower high or higher high with divergences.
Intermediate term - RSI broke below the trend line, even if we see a higher high I expect RSI divergence and reversal lower.
Long term - no change, waiting for the wave from Feb.2016 to be finished. The histogram turned lower, anything to the upside should be short living.
MARKET BREADTH INDICATORS
The Market Breadth Indicators - all indicators turned lower and look bearish.... the price should follow soon.
McClellan Oscillator - moved below -80 and retracing from oversold levels.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal.
Bullish Percentage - turned lower, but still above 70.
Percent of Stocks above MA50 - turned lower but still at higher levels.
Fear Indicator VIX - making higher lows, but still not exploding higher.
Advance-Decline Issues - heading for the oversold level.
HURST CYCLES
Day 27 of the 40 day cycle. The 18 month cycle is pulling the price lower already.
Week 7 of the last 20 week cycle. Waiting for a turn lower and 18 month cycle low in late April.
A lot of interest about GDXJ. In my last comment I wrote what I expect and here is visual how it looks like.
Whole week the market tortured the bulls and the bounce came in the last few hours. The market is cruel, the big boys squeeze you until you give up. I hope those who are holding longs has not freaked out and sold at the bottom.
Thanks Krasi! Appreciate your weekly analysis. Any idea what the RUT is up to? targets?
ReplyDeletethank you
I assume it has the same pattern... in this case it should correct to around 1300 or slightly lower. It looks more bearish than the majors, but to say the correction is already running I want to see one more lower low in the 1330-1340 area for wave A.
DeleteI hope that people will respect your time by not asking more than a question or two maximum. Maybe that GDXJ chart will satisfy their anxiety/concerns. I mostly am interested in your S&P 500 analysis where I can move larger sums of money in various accounts for the intermediate term. I can't trade frequently and still maintain my regular work outside of the markets. Thanks.
ReplyDeleteI understands them, I went trough this too. I lost years because there were no one to explain me how trading works... that is why I am trying to help.
DeleteI have a full time job too. Last year I have started trading only longer time frames - less stress and more profitable.
Especially with larger sums you do not need frequent trading a few trades per year is better.
Krasi,
ReplyDeleteI am looking at the Nasdaq and it looks like we made 61.8% retracement from March 1 top to March 9 bottom yesterday. If we are in an impulse lower, we should see move lower from yesterday's highs. No? And the move in the nasdaq 100, looks like a completion of the wave 2. I guess what I am asking is a break of this index to higher levels would favor one more higher high rather than lower high. What do you think?
Thanks,
Kali
With NYMO moving below -80 and FOMC next week is more likely that the indexes will crawl higher even if we have a reversal. Wave 2 can make a high above 61,8%.
DeleteYes, the other indexes should make higher highs too. There is no enough evidence for reversal and in a bull market in wave 3 you have to assume that another high is coming unless you see clear impulse in the opposite direction.
I thought I saw a clear impulse in the biotech index. Haha. I am still very optimistic shorting at this point provides excellent risk to reward. Who truly knows when the market will resume the reversal or start it?
DeleteGood luck everyone.
Kali
grazie Krasi per avere inserito il traduttore
ReplyDeleteottime analisi , come del resto hai fatto sempre , ottimo anche il conteggio alternativo , grazie
It's interesting to read your long term update posts before. I'm wondering if we really get the bear market bottom around 2022, how about real estate market? Should we expect another bottom again? Sometimes people said the housing market follows 18 years cycle, which means we may not have housing crash again even we meet the possible 2020-2022 downturn for stocks? Just like 2000 when stock crashed but real estate still up for another 7-8 years cycle? Thanks.
ReplyDeleteFor the real estate market you have to watch completely different charts. Probably there is a connection with the other markets when I see how the money moves from one market into another... money does not disappear it just moves from one asset class into another.
DeleteI suppose there is similar cycles like stocks too... it is human nature the development is not linear it is up and down.
I have no observations I can only guess - if bad debts were purged from the system there will be some problems with REIT but nothing dramatic, if not it can be a drama again... commercial REITs will be hit harder I think.
Thanks for your time! Seems like you are expecting a move up in GDXJ into the all important FOMC day this week followed by another all mighty sell off?
ReplyDeleteYes, I expect one more lower low after FOMC before a bigger bounce.
DeleteHi Krasi
ReplyDeleteLike others, I really appreciate your comments. I have more general question about reliability of EW. It seems that according to the theory any 5 wave cycle should be completed before a correction happens. Let's assume that market is in 4th corrective wave, like we were a couple of weeks ago with Spx. Imagine a huge adverse event happens in the US or other parts of the world which prompts a major sell off. So 5th wave never follows. How does the EW theory account for such a occurrence? Does it simply negate the last 4 waves as invalid? What are they then? A falls breakout? Or is EW theory a reflection of all events that rhythmically, in the sequence of 5 waves + 3 corrective waves,occur? Always?
In your experience, has it ever occurred to you?
I realize that my question may seem naive but so far I was not able to find the answer to this question. In addition I am an EW beginner student so I don't have much experience. Thank you
Krisarnold
Truncated fifth wave.
ReplyDeleteI do not have experience with such events, but when I look at history 1987 crash/2001 twin towers/Volkswagen scandal the direction was already down. I do not know such occasions when something moved higher and suddenly some event changes the trend. The explanation is simple cataclysmic events happen because something in society is not working. This "bad mood" is already reflected by EW. When tensions really escalate then you see a war or terrorist attacks etc. and this comes later.
Or you just say shit happens and you continue counting the waves:)
Thank you for your answer, Krasi.
DeleteI also would like to ask you what would be wrong with the assumption that Spx has just reached the peak of wave V on your long term chart. Being in the wave V since February 2016 it seems quite arbitrary to call any top of wave v also the top of wave V. Why am I wrong to draw such a conclusion? Thank you in advance.
Krisarnold
Because there is nothing to suggest that this is the top of wave 5 of V. Everything behaves and feels like wave 3.
DeleteEW - all indexes count much better as 3 than 5. I do not know index which counts as 5 from Feb.2016
Cycles/Seasonality - it is too early for a major top.
M.Breadth - max complacency VIX hit 10. You see this before the top. One more high follows with divergences follow. The mood do not change in a U-turn.
TA indicators - RSI on the weekly chart hit overbought levels which means strength. The market does not make a top on strength. Expect one more higher high and weakness.
I can see now I overlooked one important wave count here. So would it be correct to assume an estimate of wave 5 top to be 9-13 months away? I took it from your intermediate chart count of wave 3 and the assumption that wave 5 will be similar in length + the time allowed for the current correction.
DeleteThank you
Krisarnold
I am watching October-November this year and toping pattern 3-6 months so yes 7-13 months before we see strong move lower.
DeleteJust wondering why you may have eliminated the "green" higher low possibility from last week's post on GDXJ? At that time you thought the higher low would prevail. Thank you Krasi.
ReplyDeleteGold/Silver mutated in a much bigger impulse. If they synchronize GDXJ will make lower low. I do not know, I am not so good in counting this nested waves... GDXJ could make higher low who knows.
Deleteyes... what does this "If they synchronize GDXJ will make lower low."? Why? If gold and silver synchronize, GDXJ will make lower low because? Usually silver should move ahead of gold or? Thanks.
DeletePM started moving lower later than gold miners - they were not moving in sync. After that the move lower for PM changed to much bigger impulse, which is not finished... we should see a lower low. If the moves lower for PM and gold miners synchronize(make a low at the same time) then GDXJ should make one more lower low. GDXJ looks strong, but looking at GDX and XAU one more lower low will look better for a finished impulse - exactly like gold/silver.
DeleteThank you. So we should expect gold miner make another low to synchronize gold final bottom low...How about the current rebound? Finished or still another small wave v until tomorrow before the FOMC meeting result?
DeleteProbably finished a-b-c higher and already reversing.
DeleteNo, no, that's fine. I was just curious. I wasn't sure whether you saw something definitive to change your mind. Thanks as always.
ReplyDeleteHi, do you expect the Gold miner has already bottom? Because March 14 reversal is so strong...
ReplyDeleteNo we need to see a lower low for a bottom.
Deletesorry to ask again. What's next? Thanks.
Delete